The Survey claimed that India’s trajectory during the pandemic was unique, and argued that “the upturn in the economy while avoiding a second wave of infections makes India a sui generis case in strategic policymaking amidst a once-in-a-century pandemic.”
Taking aim at alternative theories for the limited number of deaths in India – such as, for example, greater population resistance – the Survey assigns complete responsibility for the relatively low population mortality in India during the pandemic to the draconian nature of the initial lockdown. Indeed, it also argues that not only did the “stringent lockdown saved lives”, but it also “supported a V-shaped recovery across all the economic indicators.
The Survey further claims that “costs and opportunities” were weighed “strategically” before the first lockdown, and it presented some basic calculations to conclude that government management led to India having 3.7 million less cases than expected.
The Survey conducted a similar back-of-the-envelope exercise – using population density, global numbers, and demographic profiles – for the various states of the Union, concluding in this case that Kerala and Telangana had saved the most lives, while Maharashtra “has performed the worst in number of cases and deaths”. The Survey also made the politically effective, though economically questionable, decision to compare the effectiveness of pandemic control in globalised Maharashtra on the one hand and in Uttar Pradesh and Bihar on the other, concluding the latter states’ policies therefore “held India in good stead”.
Arguing that the regulators’ forbearance on bank loans was necessitated by the pandemic, the Survey nevertheless makes a strong call, based on the experience following the financial crisis of 2008, for withdrawing that forbearance quickly. It says that “when an emergency medicine becomes a staple diet, it can be counter-productive”, and says that an Asset Quality Review should be “conducted immediately after the forbearance is withdrawn”.
It also praises the relief packages, indicating that they were calibrated and used “Bayesian updating”. It noted that there was no point in stimulating demand when supply was constrained during the lockdown, comparing it to “pushing the accelerator while the foot was firmly on the brake”. The time for stimulus, however, according to the Survey, has clearly arrived. In fact, it demands “a sustained, productive programme of permanent stimulus directed towards public investment, in both human and physical capital”.
Concerns about debt sustainability and credit ratings downgrade in the face of “permanent stimulus” are dismissed. Arguing that India’s willingness and ability to pay its debt is evident through history and through the size of its foreign exchange reserves when compared to the tiny proportion of sovereign, foreign-currency-denominated debt.
The Survey attacked global credit ratings of India’s sovereign debt, currently one step above junk status, as not reflecting India’s fundamentals, and being “noisy, opaque and biased”. Government spending should therefore ignore not just the debt to GDP ratio, but also the threat of downgrades, argued the survey: “India’s fiscal policy, therefore, must not remain beholden to a noisy/biased measure of India’s fundamentals and should instead reflect Gurudev Rabindranath Thakur’s sentiment of a mind without fear.”